T.R. Thandur
Vs. Union of India & Ors [1996] INSC 509
(8 April 1996)
Verma,
Jagdish Saran (J) Verma, Jagdish Saran (J) Bharucha S.P. (J) Paripoornan, K.S.(J)
J.S. Verma, J. :
CITATION:
1996 AIR 1643 1996 SCC (3) 690 JT 1996 (4) 14 1996 SCALE (3)322
ACT:
HEAD NOTE:
The
petitioner booked a small flat with an area of 950 sq.ft. in a multi-storeyed
building containing several flats on the excess vacant land belonging to
respondent No.3, exempted under Section 20(1)(b) of the Urban Land (Ceiling & Regulation) Act, 1976 to be constructed by
respondent no.4 in survey No.44, Marenahalli Uttarahalli Hobli, Bangalore South
taluk. Under the agreement, the petitioner was to purchase the flat together
with 1/48 share in the land on which the building was to be constructed. Under
the Karnataka Ownership Flats (Regulation of the Promotion of Construction, Sale, Management and Transfer) Act, 1972 the promoter,
namely, respondent no.4, is required to convey title and execute documents for
the share in land of the flat/apartment. The petitioner took necessary steps
for purchase of the flat together with his share of the land on which the
multi-storeyed building is constructed. However, the respondent no.4 regretted
its inability vide later dated 20.6.1993 to either execute the conveyance for
transfer of the petitioner's share of land or to handover possession of the
said flat to him be-cause of the order dated 16.6.1993 of the Karnataka High
Court. The petitioner was informed that the Karnataka High Court, by the said
order, had restrained the State Government from issuing any orders permitting
transfer of the excess vacant land and therefore, the respondents were not in a
position to comply with the petitioner's demand. The order of the Karnataka
High Court is based on the decision of this Court in (3) scc 467, which
prohibits transfer of any part of the exceess vacant land in respect of which
exemption is granted under Section 20(1)(b) of Urban Land (Ceiling &
Regulation) Act, 1976. The decision in S.Vasudeva being the basis of the
impugned action, this writ petition has been filed under Article 32 of the
Constitution challenging this action; and for that reason, correctness of the
decision in S.Vasudeva arises for consideration. No other facts are material
for deciding the question raised in this writ petition.
In S.Vasudeva,
a Division Bench comprised of two learned Judges of this Court (P.B.Sawant and N.P.Singh,
JJ.) have held "that the provisions of Section 20(1)(b) of the Act do not
permit the State Government to give exemption to the vacant land in excess of
the ceiling limit for the purpose of transferring the same". This is the
common conclusion reached by the two learned Judges in their separate opinions.
The State Government is applying this decision to all cases of exemption under
Section 20 of the Act. The question, therefore, is : Whether this conclusion of
restriction on transfer must apply invariably in all cases of exemption granted
under Section 20 of the Act? The relevant provisions in the Urban Land (Ceiling & Regulation) Act, 1976 may now be referred.
Chapter II contains the definitions in Section 2. Chapter III contains Sections
3 to 24 with the heading Ceiling on vacant land'.
Chapter
IV contains Sections 25 to 30 under the heading Regulation of Transfer and Use
of Under Property and Chapter V contains the mis-cellanteous provisions in
Sections 31 to 47. The relevant definitions are as under :
"Chapter
II.
Definitions
------------
2.
Definitions:- In this Act, unless the context otherwise requires, - xxx xxx xxx
(c) "ceiling limit" means the ceiling limit specified in Sec.4;
xxx xxx
xxx (q) "vacant land" means land, not being land mainly used for the
purpose of agriculture, in an urban agglomeration, but does not include, - (i)
land on which construction of a building is not permissible under the building
regulations in force in the area in which such land is situated;
(ii)
in an area where are building regulations, the land occupied by any building
which has been constructed before, or is being constructed on, the appointed
day with the approval of the appropriate authority and the land appurtenant to
such building; and (iii) in an area where there are no building regulations,
the land occupied by any building which has been constructed before, or is
being constructed on, the appointed day and the land appurtenant to such building
:
Provided
that where any person ordinarily keeps his cattle, other than for the purpose
of dairy farming or for the purpose of breeding of live-stock, on any land
situated in a village within an urban agglomeration (described as a village in
the revenue records), then, so much extent of the land as has been ordinarily
used for the keeping of such cattle immediately before the appointed day shall
not be deemed to be vacant land for the purposes of this clause.
xxx xxx
xxx Chapter III Ceiling on Vacant Land ----------------------------
3.
Persons not entitled to hold vacant land in excess of the ceiling limit -
Except as otherwise provided in this Act, on and from the commencement of this
Act, no person shall be entitled to hold any vacant land in excess of the
ceiling limit in the territories to which this Act applies under sub- section
(2) of Sec.1.
4.
Ceiling limit - (1) Subject to the other provisions of this section, in the
case of every person, the ceiling limit shall be,- xxx xxx xxx (3)
Notwithstanding anything contained in sub-section (1), where in respect of any
vacant land any scheme for group housing has been sanctioned by an authority
competent in this behalf immediately before the commencement of this Act, then,
the person holding such vacant land at such commencement shall be entitled to
continue to hold such land for the purpose of group housing ;
Provided
that not more than one dwelling unit in the group housing shall be owned by one
single person :
Provided
further, that the extent of vacant land which such person shall be entitled to
hold shall, in no case, exceed - (a) the extent required under any building
regulations governing such group housing; or (b) the extent calculated by
multiplying the number of dwelling units in the group housing and the
appropriate ceiling limit referred to in sub-section (1), whichever is less.
Explanation
- For the purposes of this sub-section and sub-section (10). - (i) "group
housing" means a building constructed or to be constructed with one or morefloors,
each floor consisting of one or more dwelling units and having common service
facilities;
(ii)
"common service facility" includes facility like staircase, baloney
and verandah.
xxx xxx
xxx
5.
Transfer of vacant land :- xxx xxx xxx (3) In any State to which this Act
applies in the first instance and in any State which adopts this Act under Cl.(1)
of Art.252 of the Constitution, no person holding vacant land in excess of the
ceiling limit immediately before the commencement of this Act shall transfer
any such land or part thereof by way of sale, mortgage, gift, lease or
otherwise until he has furnished a statement under Sec.6 and a notification
regarding the excess vacant land held by him has been published under sub-
section (1) of Sec.10; and any such transfer made in contravention of this
provision shall be deemed to be null and void.
xxx xxx
xxx
10.
Acquisition of vacant land in excess of ceiling limit.- xxx xxx xxx (4) During
the period commencing on the date of publication of the notification under
sub-section (1) and ending with the date specified in the declaration made
under sub- section (3), - (i) no person shall transfer by way of sale,
mortgage, gift, lease or otherwise any excess vacant land (including any part
thereof) specified in the notification aforesaid and any such transfer made in
contravention of this provision shall be deemed to be null and void; and (ii)
no person shall alter or cause to be altered the use of such excess vacant
land.
xxx xxx
xxx
20.
Power to exempt - (1) Notwithstanding anything contained in any of the
foregoing provisions of this Chapter- (a) where any person holds vacant land in
excess of the ceiling limit and the State Government is satisfied, either on
its own motion or otherwise, that, having regard to the location of such land,
the purpose for which such land is being or is proposed to be used and such
other relevant factors as the circumstances of the case may require, it is
necessary or expedient in the public interest so to do, that Government may, by
order, exempt, subject to such conditions, if any, as may be specified in the
order, such vacant land from the provisions of this Chapter:
(b)
where any person holds vacant land in excess of the ceiling limit and the State
Government, either on its own motion or otherwise, is satisfied that the
application of the provisions of this Chapter would cause undue hardship to
such person, that Government may by order, exempt, subject to such conditions,
if any, as may be specified in the order, such vacant land from the provisions
of this Chapter;
Provided
that no order under this clause shall be made unless the reasons for doing so
are recorded in writing.
(2) If
at any time the State Government is satisfied that any of the conditions
subject to which any exemption under Cl.(a) or Cl.(b) of sub-section (1) is
granted is not complied with by any person, it shall be competent for the State
Government to withdraw, by order, such exemption after giving a reasonable
opportunity to such person for making a representation against the proposed
withdrawal and thereupon the provisions of this Chapter shall apply
accordingly.
21.
Excess vacant land not to be treated as excess in certain cases- (1)
Notwithstanding anything contained in any of the foregoing provisions of this
chapter, where a person holds any vacant land in excess of the ceiling limit
and such person declares within such time, in such form and in such manner as
may be prescribed before the competent authority that such land is to be
utilized for the construction of dwelling unit (each such dwelling unit having
a plinth area not exceeding eighty square meters) for the accommodation of the
weaker sections of the society, in accordance with any scheme approved by such
authority as the State Government may, by notification in the official Gazette,
specify in this behalf, then, the competent authority may, after making such
inquiry as it deems fit, declare such land not to be excess land for the
purposes of this chapter and permit such person to continue to hold such land
for the aforesaid purpose, subject to such terms and conditions as may be
prescribed, including a condition as to the time limit within which such
buildings are to be constructed.
(2)
Where any person contravenes any of the conditions subject to which the
permission has been granted under sub-section (1), the competent authority
shall, by order, and after giving such person an opportunity of being heard,
declare such land to be excess land and thereupon all the provisions of this
chapter shall apply accordingly." The main question is the meaning of the
expression "undue hardship" in clause (b) of sub-section (1) of
Section 20 and the effect of the exemption granted under Section 20 of the Act.
The Urban Land (Ceiling & Regulation) Act, 1976 is specified in the
Ninth Schedule at item No. 132. The question of its constitutional validity
does not, therefore, arise. The decision in S. Vasudeva is, therefore, related
only to the construction of Section 20(1)(b) to ascertain its meaning. Both the
learned Judges of the Division Bench have reached the same conclusion in their
separate opinions.
Reference
may be made at this stage to that decision. In that case, the State Government
granted exemption under Section 20 of the Act for industrial use of a granite
factory subject to certain conditions which included a condition that the land
shall not be transferred in any manner without prior permission of the
Government. Later, the State Government permitted sale of the exempted land
subject to certain conditions. Thereafter, another application was made by the
owner of the remaining excess land for permission to transfer the remaining
vacant land on the ground of undue hardship, which too was granted subject to certain
conditions. The transaction benefited a close relative of the Chief Minister of
the State. On these undisputed facts, writ petitions were filed, inter alia,
for quashing the orders granting exemption under Section 20 of the Act and
certain consequential reliefs. The questions which arose for decisions in that
case related to the validity of the permissions granted by the State Government
for transfer of the exempted land. The challenge to validity of the permissions
was also on the ground of malafides because of the resulting benefit to a close
relative of the Chief Minister of the State.
The
main judgment in S.Vasudeva is by P.B. Sawant, J. and N.P. Singh, J. in his
concurring opinion agreed with the conclusion reached by P.B. Sawant, J. The
question of malafides was not considered and the State Government's orders were
struck down as invalid on the ground that Section 20(1)(b) does not permit the
State Government to exempt vacant land in excess of the ceiling limit for the
purpose of its transfer. Sawant, J. held as under:- "It would be apparent
from clause (a) of sub-section (1) of the section that under it, the State
Government is given power to exempt the excess vacant land from the operation
of Chapter III only if the State Government is satisfied that having regard to
(i) the location of the land and (ii) the purpose for which it is being or is
proposed to be used, it is necessary or expedient in the public interest to
exempt it. The paramount consideration is the public interest. The exemption
granted under this provision may be subject to certain conditions. But, it does
not appear that it is obligatory to impose such conditions. Not in at necessary
to record reasons when exemption is granted under this clause".
"The
power to exempt such land under clause (b) of sub-section (1) can be exercised
by the State Government, if it is satisfied that the application of Chapter III
would cause undue hardship to the land-holder. The exemption way be granted
under this clause subject to such conditions, if any, as may be specified in
the order. But, unlike under clause (a), there is no obligation to prescribe
the conditions. The permission given under this clause, however, has to be
supported by reasons to be recorded in writing".
"Sub-section
(2) of the section enables the Government to withdraw the exemption granted
either under clause (a) or (b), if is satisfied that any of the conditions
subject to which the exemption is given, is not complied with. Clauses (a) and
(b) of sub- section (1) dead with sub-section (2) make it clear that the
exemption may either be conditional or absolute. Where it is conditional, it
may be withdrawn, if any of the conditions are not complied with. The very
fact, however, that the legislature has contemplated imposition of conditions
on exemptions granted under both the clauses, shows that the purpose of the
exemption under either of the clauses cannot be the transfer of the land. The
exemption under clause (a) is obviously for the land being put to a particular
use which use is also necessary or expedient in the pubic interest, while
exemption under clause (b) is for relieving the person concerned from any undue
hardship which may be caused to him personally, by the withdrawal of the excess
land from his possession probable such as when the person may require the land
for the expansion of the use to which he has already put it, such as his
growing business or activities or to accommodate his growing family. The clause
unfortunately is completely silent on what it intends to convey by the
expression "undue hardship".
(paras
31, 32 and 33) "The examination of the aforesaid relevant provisions of
the Act shows a clear intention of the legislature and revels a definite
scheme. It has to be admitted that the provisions of the Act as are drafted
have not succeeded in translating into words the clear intention of the
legislature and to that extent the Act is an inelegant and confused piece of
drafting. However, since the intention is clear, a harmonious reading of all
the provisions consistent with that intention is necessary to interpret and
understand each of the said provisions. The intention of the legislature is to
acquire all vacant land in excess of the ceiling limit prescribed by the Act
and the main purpose of the Act, as stated earlier, is three-fold, viz.,
(i) to
prevent concentration of the urban land in the bands of a few persons and to
prevent speculation and profiteering therein;
(ii)
to distribute the urban land equitably and
(iii) to
regulate the construction of buildings on the urban lands.
Consistent
with these objectives, the Act provides for acquisition of all urban vacant
land in excess of the ceiling limit and prohibits its transfer in any form
absolutely.
All
that the Act permits in the case of such excess vacant land is either express
exemption from the operation of Sections 3 to 19 of Chapter III of the Act by
the State Government under Section 20 or non- declaration of such land as an
excess vacant land by t he competent authority under Section 21 or the retention
of such land with the landholder to be permitted by the competent authority
under Section 22 of the Act".
"The
effect of exemption of the land from the provisions of Sections 3 to 19 or of
the non- declaration of the land as excess land or of the retention of the land
with the landholder under Section 20, 21 and 22 respectively, is not to permit
the landholder to deal with it as he likes including to transfer it. In fact,
the exemption, the non-declaration and the retention permitted, is on certain
conditions which are required to be prescribed by the State Government or the
competent authority as the case may be. If those conditions are not complied
with or are contravened, the State Government or the competent authority is
given power to withdraw the exemption or to declare the land as excess. This
power given to the State Government and the competent authority itself
negatives either power to permit the transfer or the right to transfer. What is
more, Chapter IV which alone makes provisions for transfer and use of urban property,
makes provision for transfer of vacant land within the ceiling limit subject to
certain conditions. It also makes provisions for the transfer of the land in
excess of the ceiling limit with a building thereon or with a portion of such
building. It makes, however, no provision for transfer of land in excess of the
ceiling limit without a building or a portion of a building thereon. That is
consistent with the object of the Act since the Act does not contemplate
transfer of the vacant land in excess of the ceiling limit. It only provides
for exemption of such land from being acquired and vested in the State
Government or for non-declaration of it as an excess land or for the retention
of the same with the holder and that too subject to certain conditions which
may be prescribed, as stated earlier.
(paras
46 and 47) "The first question that arises is whether the provisions of
Section 20(1)(b) permit the State Government to permit the sale of the excess
vacant land to a third party. According to us, the answer has to be in the
negative for reasons more than one.
"In
the first instance, the central object of the Act, as is evident both from the
preamble as well as the statement of objects and reasons, is to acquire vacant
land in excess of the ceiling area and to prevent speculation and profiteering
in the same and also to distribute the land equitable to subserve the common
good. It is, therefore, per se against the said object to permit the sale of
the excess vacant land for whatever reasons, including the undue hardship of
the landholder. To construe the provision of Section 20(1)(b) so as to read in
them the conferment of such power on the State Government for whatever reasons,
is to distort and defeat the whole purpose of the legislation. Further neither
the plain language of the clause nor its context and intendment merit such
construction. Section 20 itself is titled "Power to exempt".
The
power given to the State Governments under the section is only to exempt
certain excess vacant lands from the operation of the provisions of Sections 3
to 19 of Chapter III, note of which refers to the subject of transfer or
restrictions on transfer. Those provisions relate to the calculation,
declaration, acquisition and vasting of the excess vacant land. It is Chapter
IV relates to the transfers of vacant lands and the restrictions thereon.
Further, from the scheme of the Act, it is evident that the transfers of the
vacant land were to be regulated by the specific provisions made in it. They
were not to be left to be governed by the unguided discretion of any authority
including the State Government. The specific provisions for regulating the
transfer have been incorporated in Sections 26 to 28 of the Act. Those
provisions permit transfer of only vacant lands within the ceiling limit but
without buildings, and of vacant lands in excess of the ceiling limit but with
buildings thereon and subject to the conditions laid down there. It cannot be
suggested that in defiance of the said provisions. Section to sanctions sales
of excess vacant lands with or without building thereon. Under Section 20(1)(b),
the State Government can only exempt such excess vacant land from being
acquired by it. The Government cannot permit its transfer when the Act does not
even by implication authorise it to do so but permits the transfer subject only
to the conditions prescribed by Section
27.
The legislature cannot be presumed to have prescribed different conditions for
transfer of the same or similar lands.
(paras
55 and 56) "Fourthly, the exemption which is granted under Section 20(1)(b)
has to be supported by reasons to be recorded in writing. This requirement also
contemplates an exemption which is related to and prompted by the use or better
use of the land. If it is the financial hardship which was under the
contemplation of the legislature, there was nothing easier than to make a
reference to the same in clause (b) if self and to lay down guidelines for the
inquiry into such hardship".
(para
59) "Lastly, if the power to exempt the land for sale is read in Section
20(1)(b) with such conditions as the State Government may choose to place and
if either the State Government chooses not to place any conditions or to place
such conditions as are inconsistent with the provisions of Sections 29 and 30 ,
it would create two sets of lands - one where no restrictions are applicable to
the construction thereon or only such restrictions as the State Government may
choose to impose, and the other where the restrictions on constructions as provided
by Sections 29 and 30 would be applicable".
"It
is, therefore, more than clear that the provisions of Section 20(1)(b) do not
permit the State Government to exempt vacant land in excess of the ceiling
limit for the purposes of transfer".
(paras
64 and 65) In his concurring opinion, Singh, J, held as under :- "I agree
with brother Sawant, J. that it is not possible to hold that State Government
can grant exemption under Section 20(1)(b) of the Act, to the holder of the
excess vacant land, so that he may transfer the same in the winner be desires.
The object of the Act being imposition of ceiling on vacant land in urban
agglomerations and for acquisition of such land in excess of ceiling limit,
with a view to prevent the concentration of urban land in the bands of a few
persons, speculations and profiteering therein, will that object be not
defeated if it is held that power under Section 20(1) of the Act can be
exercised by the State Government to exempt the excess vacant lands from the
application of Chapter III of the Act, so that the holder thereof can transfer
such lands ? Sub-section (1) of Section 20 is in two parts.
The
exemption under clause (a) of the said sub-section is to be granted in the
public interest whereas under clause (b) the exemption is to be granted taking
into consideration the "undue hardship" of the holder of the land in
excess of the ceiling limit.
Both
the expressions "public interest" and "undue hardship" are
comprehensive in nature. But at the same time, it is not easy even for courts
to say as to whether under different circumstances the exemption was in the
"public interest" or was necessary in the interest of the holder of
the land because of his "undue hardship".
Under
Indian conditions expression "undue hardship" is normally related to
economic hardship. That is why from time to time many holders of lands in
excess of the ceiling limit, while claiming exemption under clause (b) put
forth their bad economic condition and indebtedness to claim exemption along
with permission to sell such excess lands. In the modern set-up many holders of
such excess lands having undertaken commercial or industrial ventures with the
help of the loans from the Banks and other financial institutions put the place
of repayment of such loans as undue hardship for claiming exemption under
clause (b) of Section 20(1) aforesaid. How the holders of excess lands having
incurred losses or having failed to discharge their debts can claim exemption
on the ground of "undue hardship" in such a situation ? Section 4
while fixing the ceiling limit, under sub-section (3) takes notes of the fact
that "where in respect of any vacant land any scheme for group housing has
been sanctioned by an authority competent in this behalf immediately before the
commencement of this Act, then, the person holding such vacant land at such
commencement shall be entitled to continue to hold such land for the purpose of
group housing." But at the same time under sub-section (4) of Section 4 it
has been specified that "if on or after the 17 day of February, 1975, but
before the appointed day, any person has made any transfer by way of sale,
mortgage, gift, lease or otherwise (other than a bona fide sale under a
registered deed for valuable consideration) of any vacant land held by him and
situated in such State to any other person, whether or not for consideration,
then, for the purposes of calculating the extent of vacant land held by such
person the land so transferred shall be taken into account without prejudice to
the rights or interests of the transferee in the land so transferred".
Similarly in Section 5 it has been provided that "where any person who had
held vacant land in excess of the ceiling limit at any time during the period
commencing on the appointed day and ending with the commencement of this Act,
has transferred such land or part thereof by way of sale, mortgage, gift, lease
or otherwise, the extent of the land so transferred shall also be taken into
account in calculating the extent of vacant land held by such person".
When different provisions take into consideration the lands already transferred
by the holder,
(i) between
the period February 17,
1975 and the appointed
day;
(ii)
as well as between the period commencing from the appointed day and ending with
the commencement of the Act, it should not be easily inferred that the framers
of the Act desired that after the commencement of the Act while exercising the
power of exemption under Section 20(1)(b) permission should be granted to
holders of such excess lands to transfer such lands to third parties in order
to meet their financial liabilities." (paras 66 and 67) "If the
vacant lands which have vested in the State are also to be disposed of strictly
keeping in view the spiral and object of the Act how under Section 20(1)(b)
exemption can be granted to holders of such lands to dispose of such lands in
the manner they like, the persons they prefer, the price they dictate, for
clearing their debts ? If it is conceded that indebtedness amounts to an undue
hardship. Then it may cover the debts incurred even after the commencement of
the Act. The ceiling limit has been fixed by Section 3 with reference to the
date of the commencement of the Act, but exception can be granted till such
excess lands vest in the State Government under sub- section (3) of Section 10,
after publication of the notification, in terms of the said sub-section.
Although
it was not possible even for the framers of the Act to exhaustively indicate as
to what shall he deemed to be "undue hardship" within the meaning of
Section 20(1)(b) but if would have been better, if it had been illustratively
indicated, leaving the rest for the courts to decide." (para 70) The
common conclusion of the two learned Judges of the Division Bench is as under :-
"For the reasons given by us above, we are of the view that the provisions
of Section 20(1)(b) of the Act do not permit the State Government to give
exemption to the vacant land in excess of the ceiling limit for the purposes of
transferring the same.
In
view of our conclusion as above, it is not necessary to go into the further
question, viz., if the State Government has such power, in which circumstances
if can be exercised and whether financial hardship such as the indebtedness of
the landholder is sufficient to warrant such exemption or not and with respect
in which date such indebtedness is to be assessed and in whet manner, and
whether in the present case, the said aspects of the indebtedness were
investigated or properly investigated or not. For this very reason, we also do
not propose to go into the other question regarding the mala fides on the part
of the authorities while granting permission to the firm to sell the land to
the builders in question." (paras 72 and 73) It is the reconsideration of
the decision in S. Vasudeva which is involved in this case. Every learned
counsel appearing in the case including the learned Attorney General contended
that the view taken in S.
Vasudeva is incorrect
and requires reconsideration. For this reason, we requested Shri A.N. Jayaram,
learned Additional Solicitor General to appear as amicus curiae to support the
decision so that every aspect involved would be raised for consideration by us.
We are thankful to all the learned counsel including the amicus curiae for the
invaluable assistance rendered by each of them.
We
would first construe Section 20 of the Act to ascertain its meaning. It is
obvious that there being no question of the constitutional validity of the
provision, an attempt has to be made to ascertain the true meaning of every
part of Section 20. Section 20 contains the power to exempt. It has two
sub-sections. Sub-section (1) begins with the non-obstante clause
"Notwithstanding anything contained in any of the foregoing provisions of
this Chapter", after which occur clauses (a) and (b) therein which provide
for exemption, "subject to such conditions, if any, as may be specified in
the order", of "such vacant land from the provisions of this
Chapter". The non-obstante clause clearly indicates that Section 20
overrides the foregoing provisions of Chapter III, that is, Sections 3 to 19 of
the Act. This is reaffirmed in clauses (a) and (b) wherein the concluding part
in each is "Government may, by order, exempt, subject to such conditions,
if any, as may be specified in the order, such vacant land from the provisions
of this Chapter". The effect of the non-obstante clause at the beginning
of sub-section (1) and the concluding words in clauses (a) (b) undoubtedly is
that on exemption being granted subject to the conditions specified in the
order granting the exemption, such vacant land is exempted from the provisions
of Chapter III which contains Sections 3 to 24, in spite of the provisions in
Sections 3 to 19. There is no ambiguity in this behalf in sub-section (1). The
plain language of the provision leaves no room for any ambiguity.
Thus,
if the logical outcome of the exemption granted subject to the specified
conditions, is to lift the restriction on transfer of the exempted land, then
it has to be accepted. However, the imposition of conditions attached to the
exemption and the power of withdrawal of the exemption under Sub-section (2) is
intended to control the transfer in such cases. It has to be seen whether this
plain construction of Section 20 must be abandoned on any settled rule of
construction.
The
condition precedent for granting exemption under clause (a) or clause (b) must,
however, exist but on the exemption being granted thereunder, the logical
consequence of the exemption as indicated must follow. It must follow that if
the restriction on transfer of the vacant land in excess of the ceiling limit
is only because of any provision contained in Chapter III in Sections 3 to 24,
then the effect of the exemption under Section 20 is to lift even that embargo.
Sub-section (2) gives to the State Government power to withdraw the exemption
under clause (a) or clause (b) of sub-section (1) if it is satisfied in the
manner indicated that any of the conditions subject to which the exemption has
been granted is not complied with. The power of withdrawal of exemption in
sub-section (2) is to ensure full compliance of the conditions subject to which
the exemption is granted. The restriction on transfer may be imposed by such a
condition. In that even, the restriction is by virtue of the condition imposed
and not because of any statutory prohibition in Chapter III of the Act.
Section
3 contains the restriction against holding any and in excess of the ceiling
limit prescribed in Section 4, "except as otherwise provided in this
Act". Section 20 is a provision in the Act which provides otherwise. It
also begins with a non-obstante clause and, therefore, the restriction in
Section 3 is subject to Section 20. Section 5 relates to transfer of vacant
land in excess of the ceiling limit. Sub-section (3) of Section 5 contains the
prohibition against transfer of the excess vacant land indicating that any such
transfer make in contravention of the provision shall be deemed to he null and
void. For the reason stated, because of the provision made in Section 20, an
order of exemption make under Section 20 exempts the vacant land in excess of
the ceiling limit from this restriction of transfer because the order of
exemption exempts the excess vacant land from the provisions of Chapter III.
Chapter IV containing Sections 25 to 30 relates to "Regulation of Transfer
and Use of Urban Property" and is not attracted to determine the meaning
of Section 20 and the consequence of the exemption granted thereunder to the
excess vacant land.
Section
10 relates to acquisition of vacant land in excess of ceiling limit.
Sub-section (4) therein prohibits transfer of any excess vacant land during the
period specified therein. Section 5(3) and Section 10(4) are to be read
together as they relate to restrictions on transfer of vacant land in excess of
the ceiling limit. However, both these provisions cease to apply on exemption
being granted to vacant land in excess of the ceiling limit under Section 20 of
the Act. The restriction, if any, on transfer of the exempted excess vacant
land has now to be examined with reference to Section 20 itself.
Clause
(a) of sub-section (1) of Section 20 empowers the State Government to grant the
exemption of it is satisfied hiving regard to the relevant factors specified in
the clause that it is necessary or expedient to grant the exemption is the
"public interest", subject to the conditions specified in the order.
Clause (a) specifies certain relevant factors for the purpose of grant of
exemption, namely, "location of such land", "the purpose for
which such land is being or is proposed to be used" and such other
relevant factors as the circumstances of the case may require. Apart from the
location of the excess vacant land and the purpose of its use, regard must be
had to the other relevant factors, which is a question of fact in each case.
However,
these factors must indicate that the grant of exemption under clause (a) is
necessary or expedient in the "public interest". The expression
"public interest" has a legal connotation. The broad guidelines for
grant of exemption under clause (a) are enacted in the provision. A safeguard
is provided by requiring conditions to be specified in the order subject to
which the exemption is granted under clause (a). Even though there is no
proviso in clause (a) of the kind enacted thereafter in clause (b), yet the
absence of such a proviso is inconsequential since the requirement of the
expressly enacted proviso in clause (b) is implicit in the manner of exercise
of the power under clause (a). The requirement in clause (a) of making an order
having regard to the specified relevant circumstances and specifying the
conditions attached to the exemption, ensures that the decision is reached for
cogent reasons which are placed on record in writing culminating in the making
of the written order. There is no scope for the view that exemption can be
granted under clause (a) by an order specifying the conditions having regard to
the specified relevant factors without recording the reasons for doing so in
writing. Every State action must satisfy the rule of non-arbitrariness and,
therefore, recording of reasons in writing for granting the exemption under
clause (a) indicating that it is necessary or expedient in the public interest
so to do, is an essential requirement of valid exercise of power under clause
(a). This is how clause (a) must be construed and understood.
We now
come to clause (b) of sub-section (1) of Section 20 to which the decision in S. Vasudeva directly relates.
The
State Government's power to grant exemption under clause (b) depends on its
satisfaction "that the application of the provisions of this Chapter would
cause undue hardship to such person". The manner of making the order
specifying conditions to which it is subject, is the same as in clause (a). In
clause (b), a proviso is also enacted as under :- "Provided that no order
under this clause shall be made unless the reasons for doing so are recorded in
writing." The requirement of this proviso in clause (b) is implicit in
clause (a), as earlier indicated. Since the expression used in the proviso is
"this clause", the express application of the proviso has to be
confined only to clause (b). However, this difference in the two clauses is
merely of form and not of substance, as already indicated.
The
question is whether the expression "undue hardship" to such person,
that is, the person who holds vacant land in excess of the ceiling limit is a
nebulous phrase which permits an uncharted course for the exercise of the power
under clause (b), or it requires invariably the imposition of restriction on
transfer of the exempted land in spite of the clear meaning of Section 20? In
S. Vasudeva, in substance, it has been held that economic hardship of the owner
cannot fall within clause (b) to permit grant of exemption thereunder to
relieve the owner from that hardship by granting exemption and permitting
transfer of the exempted land in any case. The question is whether such a
construction of the provision is warranted.
In
clause (b), the power of the State Government to grant the exemption depends on
its satisfaction "that the application of the provisions of this Chapter
would cause undue hardship to such person". It is obvious that the undue
hardship must be a direct consequence of the application of the provisions in
Chapter III which provides for the restriction on the entitlement to hold any
vacant land in excess of the ceiling limit prescribed and further prohibits the
transfer of the excess vacant land which vests in the State Government in the
manner provided in Section 10 and the owner is entitled only to the amount
specified in Section 11 of the Act. It is clear that the "undue
hardship" caused to the owner must be the direct consequence of the
provisions contained in Chapter III of the Act which disentitles the owner to
hold any vacant land in excess of the prescribed ceiling limit and entitles him
only to the amount payable under Section 11 of the Act. It is also clear that
the expression "undue hardship" indicates that the extent of hardship
must be "undue" and not merely any hardship which is bound to result
from the application of the provisions of Chapter III of the Act. The direct
consequence of the application of the provisions of Chapter III is economic in
nature because of the compulsory acquisition of the excess vacant land in lieu
of the amount payable under Section 11, apart from deprivation of the benefit
of the use of the acquired land. In such a situational, even though mere
economic loss could not be intended to fall within the expression "undue
hardship", yet the expression cannot be construed to exclude every adverse
economic impact even if it be so great on that person as to amount to
"undue hardship" to him. This would, however, be a question of fact
in each case and unless the impact of economic hardship caused to the owner is
so great as to amount to "undue hardship" resulting from the
application of the provisions of Chapter III of the Act, it would not fall
within the ambit of clause (b). It appears that the enactment of the proviso in
clause (b) is to emphasis the requirement that there must be strong reasons
recorded in writing to justify the satisfaction of the State Government that
the hardship caused by the application of the provisions of Chapter III to such
person amounts to "undue hardship" so that the grant of exemption is
judicious, and in case of a challenge can be judicially tested. Suppose the
owner has to repay bonafide outstanding dues under earlier decrees of competent
courts and admittedly he has no other means of satisfying those decrees out of
the amount payable under Section 11. It may be possible to grant exemption
under clause (b) on the ground of undue hardship to enable him to satisfy the
decrees. This is only illustrative. In cases of exemption granted under clause
(b), the possible misuse of the exemption can be checked by imposition of
suitable conditions attached to the exemption and the State Government's power
under sub-section (2) to withdraw the exemption in case of breach of any
condition is a further safeguard in this behalf.
Cases
falling under clause (b) for grant of exemption may be rare, but it cannot be
said that the enactment of clause (b) is an exercise in futility which does not
permit grant of exemption in any case of undue hardship with permission also to
transfer. Whether there is undue hardship of the kind envisaged therein, is a
question of fact in each case. The entire provision is clause (b) has to be
given full effect and in a case falling within the ambit of clause (b), the
effect of the order of exemption is to exempt such vacant land from the
provisions of Chapter III and, therefore, also from the restriction on transfer
of such land. To hold that any land exempted under clause (b) cannot be
transferred irrespective of the conditions of the exemption is to rewrite the
provision which enacts that, subject to the conditions specified in the order
of exemption, such vacant land would be exempt from the provisions of Chapter
III, which means the exemption is also from provisions prohibiting transfer
enacted in Chapter III.
It is
clear that any case which can legitimately fall within clause (b) would be
outside the ambit of clause (a), and clause (b) is restricted in its
application. Whether a case falls within the ambit of clause (b) is again a
question of fact and if any dispute arises it will have to be tested judicially
on the facts of that case. Similarly, the validity of the exercise of power of
exemption under clause (b) would also depend on the facts of each case as it
would in respect of clause (a). But that is different from saying that a case
of undue economic hardship to the owner resulting from the application of the
provisions of Chapter III can in no case fall under clause (b) to empower to
State Government to grant exemption thereunder subject to appropriate
conditions attached to the order of exemption.
The
facts of the present case have also some relevance.
In the
present case, the restriction against transfer would operate to the extent of
restraining transfer to the individual flat owners of their corresponding share
in the land where a multi-storeyed building for group housing has been
constructed. One of the objects of the enactment is to promote group housing
with a view to provide housing accommodation to more people by promoting group
housing schemes instead of the same area of land being utilized to house lesser
number of people. A restriction on transfer of the exempted land operating in
this manner, depriving the benefit in a group housing scheme to flat owners,
does not promote the object of the legislation. This too is a relevant factor.
It
follows from the above discussion that the conclusion reached in S. Vasudeva
(supra), which directly relates to Section 20(1)(b) of the Act, is not based on
a correct construction of Section 20 of the Act. The application of that
conclusion in relation to clause (a) of sub-section (1) of Section 20 by the
Government of Karnataka is not justified even by that decision. The provisions
of Section 20 of the Act and the effect of an exemption granted under clause
(a) or clause (b) of sub-section (1) of Section 20, including the incidence of
transfer, have to be understood in the manner indicated by us herein. For the
reasons given by us, we regret our inability to concur with the contrary
conclusion reached by the two learned Judges in S. Vasudeva. The impugned order
to the extent it is contrary to the view taken by us in this decision, cannot
be upheld.
We
may, however, add that in a case where a dispute arises the validity of an
exemption granted under Section 20 of the Act would depend on the existence of
justifiable reasons recorded in writing for granting the exemption with the
conditions attached to it. This decision is not to be construed as pronouncing
on the validity of exemption and the permission to transfer, if any, even in
this case, which, if disputed, would have to be examined and adjudicated
separately.
Consequently,
the writ petition is decided in the above manner. No costs.
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